One of President Donald J. Trump's greatest health-policy coups during his term in office came in 2019.
His executive order directed hospitals to disclose the prices of a range of services and treatments. The logic behind the order was straightforward.
In order for healthcare markets to function efficiently, patients need ready access to the actual price of care.
Earlier this month, the Biden administration finalized a rule strengthening and expanding those requirements.
The announcement just goes to show that some market-based health reforms are so obviously beneficial for patients — and so urgently needed — that even Democrats can't oppose them.
President Trump's executive order attacked one of the chief causes of rising health costs in the United States — the fact that hospitals have long kept the bottom-line price of medical services secret.
As a result, patients and payers struggle to shop around for the highest-value care.
In this way, providers have insulated themselves from competition and stymied the kinds of market forces that reliably drive down costs and improve quality elsewhere in the economy.
Trump's 2019 executive order resulted in an administration rule which, among other things, required hospitals to make the insurer-negotiated rates for 300 of the most common services available in a searchable, easy-to-read format.
Hospitals were also ordered to list the prices they would accept in cash.
Hospitals didn't warm to the idea of publicizing these figures.
Several hospital groups took the administration to court to block the rule's implementation, arguing in some cases that such disclosures would somehow stifle competition.
In an especially cynical ploy, providers even suggested that the rule violated their first amendment rights to free speech.
Fortunately for patients, those arguments proved fruitless.
Nevertheless, hospitals have still found ways to keep price information away from consumers. As recently as February 2022, a mere 14.3% of hospitals had complied fully with the disclosure rules, according to a survey of 1,000 hospitals by the non-profit PatientRightsAdvocate.org.
A more recent analysis of 2,000 hospitals found that just over one-third were fully compliant as of July.
A lack of compliance is just one problem that has plagued the price transparency effort.
Many providers that did comply with posted prices in a way that was difficult to interpret and compare across hospitals — and thereby thwarted the order's very purpose.
The latest rule seeks to address some of these issues.
For instance, the policy creates a single template layout for displaying pricing data, as well as more detailed data specifications.
It also takes steps to make enforcement simpler and more automatic.
\It's encouraging, if a bit puzzling, that the Biden administration is taking price transparency so seriously.
In the insurance market, Democrats have obscured the price of health plans on the exchanges by steadily ratcheting up premium subsidies.
Roughly four in five exchange enrollees receive help from taxpayers with their premiums.
So they don't have an accurate sense of how much their coverage costs.
Instead of paying people's premiums, federal policymakers should be empowering people to exercise greater control over their healthcare dollars.
The best way to do so is to expand access to health savings accounts.
HSAs are triple tax-advantaged — deposits are exempt from income tax, grow tax-free, and are untaxed when withdrawn for medical expenses.
Allowing people to contribute more to HSAs than the current annual limit of $3,850 for individuals and $7,750 for families would help.
So would permitting seniors who are Medicare beneficiaries to contribute to HSAs.
When combined with a more transparent pricing environment, HSAs would go a long way toward revitalizing the healthcare market through greater choice and competition.
The federal government's new price transparency rule marks an important victory in the battle for market-based health policy. But the war is far from over.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is "False Premise, False Promise: The Disastrous Reality of Medicare for All," (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes' Reports — More Here.
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